New HFS Research, in collaboration with KPMG, has revealed that 96% of procurement leaders are changing sourcing strategies in response to trade volatility, AI adoption, and cybersecurity threats.
As a result, legacy sourcing models built for cost control are becoming strategic nerve centers managing real-time AI risks, data residency laws, and geopolitical escalation.
Inside the research
The study, surveying 402 senior executives across seven major industries across the United States, showcases a fundamental misread of the moment: enterprises treating structural volatility as temporary disruption. “Stability is an illusion,” warns the research. “The stable world of predictable business cycles is history. Success will belong to enterprises built to thrive amid volatility, not those waiting for turbulence to pass.”
HFS Research also revealed that while 83% of US business leaders are fast-tracking AI and automation initiatives in response to trade uncertainty, 69% remain stuck in tactical reactions or have frozen strategic investments, waiting for ‘more clarity’ that may never come.
The research identifies a growing divide between first-movers using disruption to redesign how work gets done and those still waiting for policy dust to settle. Winners are embedding AI and automation into infrastructure, modernising procurement from cost-focused to capability-focused, making cybersecurity and data control top priorities, and addressing culture change directly.
“This is a rare moment—a convergence of pressure and possibility,” the report states. “Tariffs may not be the root cause of transformation, but they are the long-delayed catalyst.”
Data sovereignty anxiety is driving concrete infrastructure changes, with 64% extremely concerned about data control, leading to increased private cloud adoption (53%) and requirements for country-specific data storage (49%).
Key findings
- Automation leads the response: 83% of enterprise leaders are accelerating AI and automation initiatives to counter trade disruption, with 40% acting within the next 12 months.
- Outsourcing is collapsing as services shift to software: Traditional outsourcing will plunge from 55% to 37% over the next two years, while platform-based service delivery will surge from 14% to 30%.
- Geographic flexibility trumps cost: 56% now prioritize delivery location flexibility over traditional vendor selection criteria like cost (35%) and expertise (28%)
- Contracts built for volatility: 52% are inserting renegotiation clauses tied to economic triggers, while 41% are breaking contracts into smaller, modular scopes
- Procurement is evolving from cost gatekeeper to AI strategist: 96% of procurement leaders are changing their sourcing strategies to address trade risk, cybersecurity, and AI integration.
- Data control and digital infrastructure drive decisions: 64% of leaders are highly concerned about data sovereignty amid tariff and trade uncertainty, fueling private cloud adoption (53%) and a surge in country-specific data storage requirements (49%).
“Business leaders face an urgent call-to-action: Stop waiting for policy clarity or global calm,” the research concludes. “This volatility isn’t temporary, it’s structural. If you’re still stuck on ‘pause,’ you’re not just missing a moment—you’re risking your future relevance.”
Read the full research here.